The Lao economy is projected to grow at 4.7 percent over the first six months of this year, a slight drop from the same period last year amid ongoing challenges. Last year’s first-half growth was projected at 4.8 percent.
The rebounding tourism industry and services with expanding production are making positive contributions to growth prospects, according to a report presented at the 8th Plenary Session of the 11th tenure Party Central Committee.
Ending on Friday, the five-day meeting noted improved revenue collection, which boosts state spending capability.
Chaired by Party Secretary General and President Thongloun Sisoulith, the quarterly meeting’s discussions focused on the implementation of the socio-economic development plan to date, budget and monetary plans for the first half of this year, and the National Agendas set in motion to tackle economic and financial hardships and the burgeoning drug trade.
While global turbulence continues to impact the economy, the central committee expressed concern over the ongoing economic challenges facing Laos and instructed the government to take action to address high-level inflation, depreciation of the kip, and rising costs, among other financial, monetary and economic issues.
Despite this concern, businesses have begun to raise their prices after the government introduced a value-added tax hike that drove up the rate from 7 to 10 percent. The new rate came into effect at the beginning of May.
Meanwhile, inflation remains high, hitting 24.92 percent in April. Although it dropped slightly from the 24.98 percent recorded in March, the rate remains far behind the target, which was set at a single digit by the end of this year.
In light of these challenges, the central committee told the government to take action to ‘make clear change’.
It emphasised the need to improve governance, streamline bureaucracy, mechanisms and regulations in order to improve the business environment and attract more private investment to drive growth.
“Completely address all hindrances, barriers and steps and cultivate confidence among investors and push for commercial-based production,” the central committee instructed.
The central committee also called for stronger reform of state-owned enterprises, noting that many of them have performed poorly, sustained losses and accumulated huge debts. It named Electricite du Laos, Lao Airlines and the Lao State Fuel Company as in need of urgent reform including restructuring of business operations, including management.
These reforms must ensure effective and efficient operations that are transparent and inspectable, the central committee suggested.
Amid a high school dropout rate and low standard of education, the meeting revolved around a solution to address these issues as a ‘strategic importance and urgent agenda’ that needs prompt action to resolve.
In this regard, the central committee told the government to invest more funds in education and to narrow the education gap between towns and remote communities, consider special supporting policies for rural and disadvantaged students from poor households, and more.
These solutions echoed the recommendations made by the World Bank in its latest report.
The Bank’s Lao Economic Monitor for April 2024 reported that public education funding had fallen, with the 2023 budget allocation for education 38 percent down from the 2013 figure in real terms.
It said an increasing number of Lao children are dropping out and those who stay are not learning, which undermines Laos’ sustainable development effort.
This has follow-on effects for subsequent education levels. Most Lao secondary students score below expected levels, especially in mathematics and science.
“If learning outcomes are to improve, the education sector needs urgent re-prioritisation and increased budget allocation,” the Bank said.
Asia News Network (ANN)/Vientiane Times